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Stablecoins Heating Up

Stablecoins will continue to get attention in the market - such as the recent concept between the CENTRE Project and Circle Pay to create a USD Coin that will be 1 : 1 fiat-collateralized. However, this is just the tip of the iceberg on this type of coin. Tether is continually bashed for inadequate financial data - is it actually backed $1 Tether to $1 dollar? If not, they just created $250 million more dollars from nothing.

Essentially the coins are using tokenization to created crypto representations of the actual dollars that exist. From Tether’s terms of use:

“Tethers are not money and are not monetary instruments. They are also not stored value or currency. There is no contractual right or other right or legal claim against us to redeem or exchange your Tethers for money.”

Companies are using other types of assets for collateralization as well, such as other cryptocurrencies, real estate or a blend of several things. TrustToken, a company based in San Francisco, has created a new stable cryptocurrency that they say is 100% guaranteed to be collateralized in US dollars: TrueUSD (TUSD). The company has developed a proprietary legal structure and offers regular audits to foster trust for TUSD token-holders.

Decentralized Stablecoins?

AirSwap partnered with MakerDAO to launch the DAI stablecoin onto its the airswap decentralized exchange platform. The DAI stablecoin is fiat-collateralized through an automated system of Collateralized Debt Positions (CDPs) for a 1 : 1 pairing with USD.

Boreal is backed by a combination of ether reserves, debt from loans, and dapp endorsement.

The coin runs through the Aurora platform, which was created by the founders of the IDEX decentralized cryptocurrency exchange. The project only finished it’s ICO token sale in January 2018. It is built on the Ethereum Blockchain as a constantly innovating financial network to create stability through the Boreal currency.

Possible Adoption?

Cryptocurrencies are working toward a more fluid global economy, but it is still so early in this process. It doesn’t seem likely that any of these early stablecoins will end up as a universally used or accepted token. However, the concept and the work going into developing the complex systems that could create a long lasting stablecoin are vital to the space.